In HM’s 2023-2024 Hotel Development Outlook, EVT Hotels and Resorts Director, Commercial, Mathew Duff, discusses the challenges and opportunities in the hotel development landscape.
Despite the challenges of the escalation in construction costs in recent years, the strong recovery in hotel trading due to increased travel demand still presents development opportunities for well-located properties in key locations. New or refurbished hotels, if well-executed, have a competitive advantage and create value for long-term asset holders.
Whilst we have seen some recent slowing in the construction cost escalation, pressure on the labour market and financial difficulties experienced by a number of construction contractors is expected to put continued pressure on construction pricing. This will remain an issue for a number of proposed developments and will require innovative design and planning to maximise the revenue generating opportunities from any development.
At EVT, our strategic goal is to maximise our assets to drive bottom line profitability. Our recent transformation of Rydges Melbourne is a testament to this approach, where we incorporated innovative design concepts to create an exceptional guest experience and significantly enhanced conference and F&B facilities in previously underutilised spaces. This property will be a flagship for the Rydges brand.
Mixed-use developments will also continue to provide opportunities for development. We are excited about recently receiving the City of Sydney’s Stage 2 Development Application approval for our 525 George St property in Sydney.
The proposed mixed-use development includes approximately 115 residential apartments, 290-room QT Hotel with conference and F&B facilities, six screen boutique cinema and retail. In line with our sustainable design focus area, we are targeting a minimum five-star Green Star rating for the building design for this development, and a minimum five-star NABERS rating for the building operation.